To B Corp or Not To B Corp?
More venture-backed businesses are considering this question. Here’s the checklist on how to decide what’s right for you.
Deciding whether or not to pursue B Corp status is a significant decision for any company. Below is a list of my top considerations.
1. Fill Out the Form
No need to hire a consultant or lawyer to help you fill out the questionnaire and become certified. The B Lab team has made the certification process user-friendly. The survey can be downloaded, you can use it to determine areas of improvement before submission, and their staff is willing and able to help if and when questions arise. It is important to note that a company can’t receive certification without twelve months of operations.
2. Size Up Your Score
Take and score the survey before making a decision regarding certification. While the survey did not initially distinguish well between industries, years of good work have gone into developing the survey and standards — there is weighting, and points are allocated, based in part on industry, region, and number of employees. This can yield unhelpful results: a recycling company whose mission is to reduce waste might yield a lower score (due to carbon emissions associated with heavy manufacturing) than a social media software developer (with questionable output of social value).
3. Assess With Stakeholders
The initial process, ongoing reporting and compliance requirements will take real time. Make sure to test the idea with all constituents in your market — investors, consumers, community — to determine whether and how being a Certified B Corp will be beneficial to your company over the short and longer-term.
4. What’s the Upkeep?
Consider what mechanisms you will adopt — including possibly changing your underlying “corporate form” — to embed mission to maintain your certification, and how this might impact your operations. Also note that reporting can be time-consuming, and B Lab will require current reports of your company’s sustainability practices; if the company converts into a new corporate form, it will need to comply with state reporting requirements, which vary by statute, as well as B Lab requirements if it intends to stay B Corp certified. Finally, investors often require reports on mission. Management should try to ensure that all reporting is aligned and meaningful (to avoid duplicative efforts) and to avoid agreeing to measure and monitor “impact” results which will be too costly or time consuming (siphoning off management time from the important business of running the company.)
5. If You Might Someday Be Acquired, Then…
If your company is acquired, you may not be able to retain B Corp status post-sale or merger unless the company remains a stand-alone subsidiary (e.g., Plum, New Chapter Vitamins, Ben & Jerry’s) or the acquiring company itself becomes a Certified B Corp (e.g., Danone/WhiteWave). The issue with the former is obviously that both the survey process and compliance are in the hands of a corporate entity (e.g., Campbells, Procter & Gamble, Unilever) that does not have any legal requirement to retain the mission alignment associated with B certification. Therefore, you might consider negotiating some agreement and mechanics around the process (e.g., forming an impact committee with actual power consisting of representatives of the acquirer and company to monitor post-sale, or tying compensation to impact metrics).
6. If You’re a Public Company, Then…
Be careful, as the survey was not originally designed for public companies. When Etsy went public, the B Lab team did quite a bit of work (and improvements continue to be made) so that publicly listed companies can actually and accurately keep up. There is an ongoing effort — The Multinational and Public Companies Advisory Council — that is working to address these issues.
For more, check out Part One and Part Two in the series:
